On Wednesday, China Education Alliance (CEUA.OB) announced that it had appointed The Ruth Group as its new investor relations firm. The New York-based IR firm, which was founded by Carol Ruth in 1999, is known for its healthcare and technology practice. Previously, Crocker Coulson of CCGIR had served CEUA.
On one hand, I think this is great news. CCGIR currently represents so many Chinese OTC companies that I've lost count. I don't know how the company can provide the necessary attention to the client, and more important, service its respective investor communities, when the company is spread so thin.
Who is The Ruth Group? CEUA's press release states that the IR firm "has a proven track record of providing top tier investor relations and public relations guidance and expertise to growing China-based companies." I set out to investigate whether on not this was true.
As far as I can tell (this is not exhaustive), The Ruth Group currently represents Sinovac Biotech (NASDAQ:SVA) and China Techfaith (NASDAQ:CNTF). The IR firm also reps Taiwanese company ChipMOS Technologies (NASDAQ:IMOS) and other semiconductor outfits in
SVA appointed The Ruth Group in November 2006. At that time, SVA's share price was ~$3.15; it is now trading at ~$3.32. When put into context, that is not so bad. The comparable in this case must be bellwether American Oriental Bioengineering (AOB), whose price was $8.11 and is now $8.20. This case is somewhat of a wash.
The story is slightly different for CNTF, a mobile handset designer. The company's relationship with The Ruth Group is a long-standing one, going back to at least 2005. However, CNTF has hit a very bad patch of late. This stock traded as high as $18 back in the salad days of 2005, and was still hitting $8 mark in October 2007. Yet, it is currently trading at a mere ~$1.41. Just a week ago, CNTF lost its CFO, COO and deputy CEO. Granted, China Techfaith faces deep structural problems in its industry, however, its IR is not blameless in this fiasco.
As for SINA, the relationship between the two extends all the way back to April 2003. In the interim, SINA has squarely established itself as one of the main online gateways in
Therefore, I think this is a mixed-to-okay report card for The Ruth Group. The good thing is, that judging from the length of its client relationships, The Ruth Group appears to be in it for the long run. It also signals to me the positioning of CEUA as a technology company. In fact, I think this is exactly what CEUA needs.My Position: None.